What Happened?
Shares of avocado company Mission Produce (NASDAQ:AVO) fell 5.4% in the afternoon session after the company agreed to acquire Calavo Growers (CVGW) in a cash-and-stock transaction valued at approximately $430 million.
Under the terms of the deal, Calavo shareholders were set to receive $27.00 per share, a figure that represented a 26% premium to Calavo's 30-day volume-weighted average price. The payment structure included $14.85 in cash and 0.9790 shares of Mission Produce for each share of Calavo. It is common for the stock of an acquiring company to fall after such an announcement, especially when it involves paying a premium and issuing new shares, which can dilute the value for existing shareholders. Upon the deal's closing, Mission Produce shareholders were expected to own approximately 80.3% of the combined entity.
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What Is The Market Telling Us
Mission Produce’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock dropped 15.9% on the news that the company reported underwhelming first-quarter (fiscal 2025) results, as high expectations heading into the quarter made it difficult for the numbers to impress Wall Street. The key highlight for the quarter was strong revenue growth of 29%, driven by higher avocado prices and increased volume in the Marketing & Distribution segment. However there were supply challenges in Mexico, which could be made worse given the trade war. Overall, the quarter was solid, but cautious macroeconomic factors remained a concern.
Mission Produce is up 3.9% since the beginning of the year, and at $12.03 per share, it is trading close to its 52-week high of $13.20 from December 2025. Investors who bought $1,000 worth of Mission Produce’s shares 5 years ago would now be looking at an investment worth $769.18.
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